Introducing the inbestMe Goal Forecaster: financial planning made easy

At inbestMe, we believe that good financial planning is key to achieving your dreams and goals. As one of the most innovative automated managers in Europe, we continue to lead with new proposals in this area, consolidating our leadership position. At inbestMe, we are firmly committed to goal-based investing and the development of good financial habits, and we want to continue promoting this vision.

That is why I am pleased to introduce our new tool, the Goal Forecaster, designed to project the evolution of your investments and verify if you are on the right track to reach your different financial goals. With this tool, completely free of charge for our clients, you will be able to define specific objectives, adjust your one-time or recurring contributions and make better decisions for your financial future.

Here’s how to use it step by step.

To do this, we will start with the example of the portfolio that we frequently discuss in our series ‘The Million Euro Portfolio‘. Other case studies can be found in the appendix.

Step 1: Select Portfolio

The first step is to select the portfolio on which you want to perform the simulation. In your inbestMe dashboard, you will see a list of your portfolios. Simply click on the card of the account for which you wish to make the forecast. For example, here we select “My 999 account” (before naming it) which is the portfolio intended for retirement (“My FIRE” as we will see below). This action will take you to the next step, where you can start customizing your simulation.

Step 2: Go to ‘Plan’ and Set Your Objective

Once you have selected your account, go to the “Plan” tab. Here you will find as always the evolution of your portfolio over time with respect to the expected returns (plan). In general, clients who have the patience to let their investment plan mature usually obtain the expected returns, with small variations. Over time, this information may no longer be as revealing. This is the case with the Million Euro Portfolio. After the various vicissitudes, the plan (see photo above: 91% cumulative/5.9% APR) is practically in line with expectations (95.6%/6.1%). Over time, the tendency to be in the blue line of the plan, despite the different crises (in this period, Covid-19 and the crisis of 2022) are increasing, and the “plan” tab will provide less and less relevant information to the client as the years go by.

With the introduction of the simulator, we go one step further: we want to help our clients assess whether they can reach their goal of accumulating a specific amount of money by a certain date. In this example, we aim for nothing less than achieving financial freedom (or potential retirement). To get started, scroll down until you find the ‘Set my goal’ button and click on it.

Step 3: Set My Objective:

After selecting Set my goal a screen will appear where you can customize your financial goal. Here you will need to:

1. Set the amount you want to reach: Use the slider to adjust the amount or enter the figure directly in the text field. This defines your specific financial goal, the amount you want to reach: in our case, €1,000,000.
2. Select the year to meet your goal: Choose the year in which you would like to reach this goal. The tool will help you visualize the progress you need to make to achieve your goal within the timeframe you have set, in this case 2060 (35 more years).

Although optional, we think it is important to assign a name to your portfolio related to your goal (you can do this by clicking on the pencil icon next to the name in the home panel of your client area, as we indicated in step 1). This will allow you to easily distinguish it if you have several goals, such as ‘Travel around the world’, ‘Retirement at the beach’ or ‘My daughter’s Master’s degree’. In this case, we use the name My FIRE (Financial Independence, Retire Early) and add a suggestive icon for easy identification.

Step 4: Review your Goal Forecaster

Once you have defined your target, a new “Forecaster” tab will be created and displayed between the “Profitability” and “Plan” tabs. Once activated, the Goal Forecasterwill provide you with a detailed analysis and summary of the 30,000 simulations in the form of a colored graph (the intensity of the color indicates a higher probability) and a table with the different probabilities and the final amounts associated with each of them. You will see a projection of the average result of your investment considering the current value of the portfolio, and taking into account your current monthly contributions (in this case already programmed at €300) and the different possible scenarios. The tool uses Monte Carlo simulations to calculate these scenarios. The 30,000 simulations projected over 35 years require a high computing power and, for such long simulations, a few seconds of waiting (for more limited simulations there is hardly any waiting).

Based on this the tool shows for our example:

Aligned or Misaligned and probability: The tool calculates the probability of success so that you can see if you are “Aligned” or “Misaligned”. In this case the forecaster tells us that our path is “Aligned”, since we have a 67% probability of obtaining the objective on the indicated date. In the example, after investing a total of 218,649 € taking the current investment (89,049 €) and the recurring contributions (300 €) we would obtain 1,318,360 € as an average result (median of the 30,000 simulations), exceeding the established objective by a certain margin (which is desirable).

Step 5: Recommendations to Achieve the Goal

In this case, we already knew the result, as we have previously used it as an example in our tests and in previous publications. If the Forecaster indicates that your target is not aligned with your current contributions, you can “Change target” or follow the recommendations by clicking on the “Achieve target” button directly from the same screen. To illustrate this let’s imagine that we now want to obtain the same target but earlier, in 2055 by clicking on the “Change target” link. Now, the simulator indicates a status of “Diverted”. Although we are close (46.7% probability), we need to make additional adjustments to have a better chance of reaching the target. The median has dropped to €953,165, although we have contributed less money (€200,649).

When you click on ‘Reach target‘, a forecaster screen will open with three alternative and mutually exclusive proposals. That is to say, each one of them by itself will help you to have high probabilities of obtaining the objective. The three alternatives that the simulator gives us are:

1. Make a one-time contribution: In this example, the simulator proposes, as a first alternative, to contribute €45,812, which will increase your total capital and improve the probability of success for your objective. Right now let’s imagine that we do not have this amount of money and we consider the second option.
2. Monthly recurring contributions: The second alternative is to increase the amount you regularly contribute to your investment. The tool will calculate and suggest a monthly recurring contribution (if you do not have any established) or an increase in your current monthly contributions to help you reach your goal on schedule. This is the case in our example, since right now we are already making a monthly recurring contribution of 300 €. The simulator recommends that in order to reach the goal we should increase that amount by €244 more.

Important note: In order for the goal simulator to make accurate projections aligned with your goals, it is essential to keep the notification of regular contributions up to date. If you make contributions directly from your bank and you have not yet registered them in inbestMe, you can create a manual notification with the monthly amount you transfer. The simulator will then take this data into account and provide results that better reflect your situation and investment objectives.

3. Increase the years: Finally, the last alternative offered by the tool is to adjust the target year if you prefer to extend the time frame and give yourself more time to reach your goal. In this case the tool tells us that increasing the years until 2060 would also achieve it (as we saw in the previous simulation).

If you decide to modify the time frame, remember to click on ‘Save target’ (located at the bottom right of the recommendations and recalculation window). By adjusting the years, you will have modified the target over time, to fix it, it is important to save it.

Step 6: Recalculate and/or Save your New Simulation

After making the necessary adjustments, click on ‘Calculate‘ to see how the changes affect your overall forecast. In this case we chose to add €150 in the additional monthly recurring contribution box (which would make a total of €450). Leaving the other parameters the same and clicking on the recalculate button, we see that we manage to align with the target, obtaining a 58.5% probability. In other words, we are still aligned, although with a lower probability than the initial 67%. In this case, if we wanted to apply this simulation and click on “Go to recurring contributions” we would modify the contribution from next month onwards.

That’s how easy it would be to have our retirement or our financial independence practically assured and on autopilot. Of course, we will have to commit to saving €450 per month, which represents a major challenge.

Conclusion: Take Control of Your Financial Future with inbestMe

Once you have set a target, you can access the new tab dedicated to this purpose: ‘Forecaster‘. It is obvious to say that market fluctuations will affect this calculation, but only if they are very relevant will they significantly change the results (e.g. an event like Covid 19 or during market crashes during 2022).

Doing a review once a year should be more than enough for long targets, as in the example. For shorter targets it is advisable to aim to be in probability ranges as high as possible and to review twice a year.

Once a target has been set, we can go to the new tab created for this purpose “Forecaster” and review our evolution whenever it is convenient. In the example we have followed, we finally chose to maintain the first objective (as shown in the photo above). At the end of 2024 we will see if we can really increase our savings and try to get closer to the goal of achieving our financial freedom in 2055, as we did by modifying the goal in years.

If you have more portfolios, it would be advisable to proceed in the same way for each one. Below, in the appendix, we show other examples of the use of the simulator that may inspire you.

The inbestMe Goal Forecasteris an easy-to-use tool that helps you plan with confidence. It allows you to visualize your financial future clearly and accurately, so you can make informed decisions and adjust your investments according to your needs. Whether you’re planning for retirement, saving for your children’s education, or looking to fulfill a personal dream, this tool gives you the flexibility and control you need to stay on track.

Start planning your financial life today and discover all you can accomplish!

We encourage you to comment below on what you’ve used it for. This may inspire others. Here are some other examples of what I am using the simulator for. I hope they serve as inspiration.

Annex: Other examples of the use of the simulator

1-InbestMe’s Goal Forecaster: the master of my children

One of my concerns is to make sure that I can provide my younger children (the older ones are already on track) with a good education in the future. This goal is to have an accumulated amount for a hypothetical master’s degree, say, when they turn 20.

This is a goal that I already had well under control, contributing €167 per month. The forecaster simply confirms that I am on the right track, with an 88% probability of achieving it and an expected average even higher, of €77,229. Probably, at some point in the next few years, I will be able to reduce this contribution or even cancel it. I can simulate with different years and I see that in 2035 I would be very likely to reach the target without changing anything. For the time being, I will not make any changes to make sure I am still on track.

Note: for inspiration, in my case I have two accounts for my young children: one in my name (the one I describe here, which will accumulate a relevant amount and, therefore, I prefer to keep under my control although it has a clear destination) and another in their name as a kids account, where they have their “electronic piggy bank” which I use for their initial financial education (spending versus saving, basic investment concepts, etc.), topics I talked about in a recent article in the Diari de Tarragona.

2-InbestMe’s Goal Forecaster: the ticket to my new car

I am not a person who likes to spend on cars (I think it is an expense, not an investment). Even so, I know that in a couple of years my current car will begin to require many repairs after more than 10 years of use, and it is time to think about buying an electric one (suggestive name for those who admire what Tesla is doing). Therefore, a few months ago, taking advantage of the launch of our Target Portfolios, I set up one for the date 4/2026 (April 2026) for which, by the way, we have extended the contracting period to 12/2024.

I have been using the forecaster these days to confirm how much extra I need to put in to make sure I have the extra €10,000 (€10,768 on average) that I will need to add to what I get for my old car. I plan to defer part of the cost for two years, as I don’t like to decapitalize myself, hoping also to get some discount for it (in general it’s better not to get into debt). I decide to contribute another €1,000 to secure my goal, clicking on “go to deposit” takes me directly to this process which I will do using the “Easy Transfer”.

This is an excellent example of the use of a Target Portfolio: having a clear and defined goal over time, ensuring capital preservation and setting a cumulative target return of 6.3% in this case (a combination difficult to achieve with other types of portfolios), which will generate more than €600 of return. The low volatility of the portfolio (reflected in the particular and more stable shape of the cone) over the period is irrelevant, as the target is well defined.

3-InbestMe’s Goal Forecaster: completing an emergency fund

In the case of ‘The Million Dollar Portfolio’ described above, the strategy was supplemented at the time by opening a Savings Portfolio to build up an emergency fund.

We now use the goal forecasterto assess whether, in addition to reaching our “FIRE” goal, we can complete a more solid emergency fund to give us peace of mind, achieving a figure of €10,000 by the year 2035.

Following the same approach as in the main objective (FIRE) of this post and choosing not to reduce the current balance of our current account by a one-time deposit of €1,416 (the first alternative), the simulator indicates as a second alternative that a monthly contribution of €12 would be sufficient to reach the objective. Therefore, from the beginning of 2025, we plan to establish a slightly higher monthly contribution of €25 to ensure 100% achievement of the target and, if possible, to reach it ahead of schedule. Recalculating with this alternative, we see that we will invest a total of just over €9,000, and the simulator shows a 100% probability of reaching €10,000, with an even higher expected average of €12,069.

Both achievements give us a lot of peace of mind, as we continue to advance towards our particular FIRE.

4-InbestMe Goal Forecaster: retirement with a portfolio of pension plans

The Goal Forecaster applied to a pension plan portfolio is somewhat different. This is because the total contribution to an individual pension plan is generally limited to €1,500 per year.

In the example we illustrate how this is reflected in the “one-time and recurring contribution” recommendations. In this case either of these two options would not be sufficient.

On the other hand, the contribution via a transfer of an external pension plan has no limit and can be requested by clicking on “go to bring an external pension plan”, clicking on “Bring pension plan” we would go directly to the process that allows this transfer of a pension plan. This procedure is handled by inbestMe and is done at no cost, has no penalty and is done while retaining the deferral and tax benefits accrued. You can opt for the easy pension plan transfer option or manually by informing your positions.

The objective simulator for this case includes an additional recommendation: the creation of a new portfolio of index funds with the same profile and informs us of the amounts that will help us achieve the objective. This portfolio will not have the advantage of the annual tax deduction that a pension plan has (limited to 1,500 e); however, it will not be subject to the liquidity limitations of a pension plan, therefore, it can be a good combination.

By combining both portfolios we would have a high probability of reaching the desired objective.

I hope that with all these examples, there is no doubt that the inbestMe Goal Forecaster is a great tool to plan and have a clear path to achieve all your vital and financial goals.

We encourage you again to comment below what you have used it for. This may serve as inspiration for others.